Ngozi Eugene, a lawyer who lives in Lagos and earns ₦600,000, began saving for a Toyota Corolla in 2022. By 2024, she had saved N4.7 million and was confident it was sufficient, but when she visited a car dealership in late February, the best deal for a used 2005 Toyota Corolla was N7 million, while a 2008 Toyota Corolla was N8 million.
Car dealers who spoke to TechCabal said her best bet, given her budget, was a Nigerian used Toyota Corolla. A combination of foreign exchange volatility, customs duty, and shipping costs are putting the prices of cars beyond the reach of many Nigerians.
“I bought a car worth $600 and got it shipped for $1600. When it got to Nigeria, I had to pay about N3 million ($1,886) to clear the vehicle. This has never happened in the history of our business,” Kolawole, a car dealer, said.
It now costs at least ₦5 million to buy a foreign-used sedan and ₦3 million for a Nigerian-used one. That is more than double the cost from 2023, according to data supplied by Pankaj Bohhra, co-founder of Fixit45.
The rise in prices coincides with a decline in imports. The number of cars imported through the Tin-Can Island port, the entry point of choice for many Nigerian imports, dropped from 32,000 units in 2018 to 4008 in 2023, according to Dera Nnadi, the Customs Controller of the Command.
Local assembly and production have also failed to grow. At a summit in 2020, Yemi Osinbajo, former Vice President, noted that available assembly plants delivered fewer than 14,000 cars.
Prices are forcing many to compromise
Those prices are forcing adjustments as some companies switch to Nigerian-used official cars or relatively new or unknown brands as cheaper alternatives to Japanese cars, which have always been the preferred option.
Other companies lease cars or use flexible auto financing for purchases.
For individual customers, auto loans are still largely unpopular. While many financial institutions offer auto loans, consumers are unaware of them or don’t understand how they work. Ngozi, for instance, believes vehicle financing options have high-interest rates.
Ojurongbe Damilola, head of technical services at Cars45, believes customers are slowly warming up to car loans, citing an increase in financing requests compared to the past year.
Ultimately, Nigeria’s car market is at a crossroads, and navigating the new normal will cause short-term pains. Local production is unlikely to increase, and as long as macroeconomic conditions remain the same, financing may still not be compelling enough for consumers.
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